Why Subaru Dumped DDB to Rekindle an Old Flame

Carmaker Drops New York Shop for Minneapolis' Carmichael Lynch

As far as Peter Hempel and Joe Cronin knew, it was a routine lunch meeting with their two lead Subaru clients last Tuesday at their DDB Worldwide offices in Manhattan. DDB Chairman-Chief Creative Officer Lee Garfinkel, who successfully pitched Subaru of America's account three years ago, was on vacation in the Far East.
Subaru Chief Marketing Officer Tim Mahoney
But they got only as far as the Aquafina before Subaru Chief Marketing Officer Tim Mahoney and Kevin Mayer, director-marketing communications, dropped a bomb on DDB's president and group account director: The agency was losing the $150 million creative and media account.

The Omnicom Group agency was still in shock late last week, wondering why it had lost Subaru without a review to Interpublic Group of Cos.' Carmichael Lynch, Minneapolis. When asked by a reporter what had happened, one stunned insider responded: "Tell me when you find out."

Relationships
The bottom line is it came down to relationships, an all-too-familiar refrain in the ad industry. Mr. Mahoney had worked with and admired the Minneapolis shop during his seven years as general-marketing manager of Porsche Cars North America -- and he never forgot that.

"I have a tremendous amount of experience with Carmichael Lynch through the Cayenne launch at Porsche, and I really came to respect the work they can do," Mr. Mahoney told Advertising Age. So when Porsche passed over its agency for Cramer-Krasselt, Chicago, last month after a review, "it seemed an opportunity that I couldn't pass up," he said.

Mr. Mahoney said he'd done the right thing by taking the train up from Philadelphia to tell the DDB execs face to face instead of by phone, e-mail or certified letter.

John Colasanti, president of Carmichael Lynch, said he had "stayed pretty close" to Mr. Mahoney, who once helped him get a deal on a Subaru Legacy GT wagon shortly after his new client left the automaker for Porsche in 1999. That same year, according to both men, Mr. Mahoney told Mr. Colasanti that Carmichael Lynch would be the perfect agency for Subaru.

Warning signs
There also were indications the partnership with DDB wasn't on track. As recently as July, Subaru tapped its gay-and-lesbian agency, Moon City Productions, New York, for the first time for a general-market campaign, for the launch of the 2008 Impreza WRX. Moon City worked with Interpublic's R/GA, New York, on the online side of the blitz.

Mr. Mahoney explained the decision by saying he'd begun a jump-ball approach to get the best ideas from all of Subaru's agencies after he arrived at the automaker last year. He also changed the automaker's long-standing policy of handing out separate briefs to each shop. Six weeks ago, Subaru added product planning to Mr. Mahoney's duties, a coup since it's the first time an American is leading that area in the U.S. for the Japanese-owned automaker.

Subaru reported that its U.S. sales through September were off nearly 7% vs. a year ago, to 136,622 vehicles. But Mr. Mahoney said DDB's "Soul of Subaru" TV spot this summer, which touted the zero-landfill approach of its Indiana car plant, was very effective. DDB's Outback TV spot in July, in which talking animals "call" a man from the city into the wild, tested very well and helped drive the model's sales that month to 103% of its business goal, a spokesman for the automaker said.

Yet many Subaru dealers found the Outback commercial "pretty lame," and it didn't get much applause at their annual meeting in June in Las Vegas, according to a dealer who asked not to be named.

Volkswagen next?
DDB, whose Toronto agency retains the Subaru account in Canada, declined to comment. But the move did fuel existing speculation that DDB might be angling for another shot at Volkswagen of America, which it is known to have been salivating over since losing that signature account in the mid-1990s. "Look for DDB to pursue a car account after it winds down on Subaru," said an executive close to the agency.

Carmichael Lynch, which is wrapping up a Porsche project that will extend into the first quarter, will "probably transition" onto Subaru's creative and media account by the end of the year, Mr. Mahoney said. Subaru has enough approved DDB work to last through the transition.

Part of Mr. Mahoney's challenge is that Subaru "is pretty much a secret in the sedan market," he said, since the brand is known more for its wagons and utilitarian vehicles. The new Impreza and Legacy models are getting some traction.

Subaru has almost completely changed over its entire model lineup of all-wheel-drive vehicles in the past two years, and the products finally match the automaker's desire to move upmarket, said Todd Turner, president of consultant CarConcepts. "The latest product line is the first tangible evidence it is a premium brand."

And Carmichael Lynch, with Porsche under its belt, sure knows premium.